1360.0 - Measuring Australia's Economy, 2003  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 03/02/2003   
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Contents >> Section 2. Summary Measures of Economic Activity >> Experimental Composite Leading Indicator

The graph below shows the experimental composite leading indicator (XCLI) and GDP (chain volume measure) expressed as deviations from their historical long term trend. The XCLI recorded a trough in the December quarter 2000. The GDP business cycle recorded a trough in the March quarter 2001, one quarter after the trough in the XCLI . The XCLI rose by 0.10 in both the December quarter 2001 and the March quarter 2002 and declined 0.03 in the June quarter 2002, a turnaround of 0.07 from the previous quarter. This indicates a provisional peak in the XCLI in the December quarter 2001.



XCLI AND GDP CHAIN VOLUME MEASURE (REFERENCE YEAR - 2000-01)
XCLI deviation from
long term trend
XCLI change from
previous quarter
GDP deviation from
long term trend
%
GDP change from
previous quarter
%
2000-2001
September
-0.13
-0.29
-0.09
0.24
December
-0.34
-0.21
-0.67
0.17
March
-0.31
0.02
-0.92
0.50
June
-0.12
0.19
-0.62
1.04
2001-2002
September
0.00
0.12
-0.11
1.25
December
0.10
0.10
0.21
1.02
March
0.10
0.00
0.39
0.84
June
0.03
-0.07
0.45
0.68
Source: Australian Economic Indicators (1350.0).


Explanatory Notes

The ABS Experimental Composite Leading Indicator (XCLI) is a single time series designed to provide early signals of turning points in the Australian business cycle. It does not predict the level of GDP or signal recessions or recoveries. Past performance of the XCLI shows it led turning points in the business cycle of GDP by around two quarters, but the lead time for the peaks and troughs can vary considerably.

The XCLI is a single time series produced by aggregating the business cycles in eight economic indicators, which had typically shown turning points ahead of the business cycle in GDP from the early 1970s to the early 1990s. These components provide a balanced coverage of several aspects of economic activity, which include monetary policy (real interest rate), an early measure of terms of trade (trade factor which is defined as the ratio of commodity prices to import prices), external demand (US real GDP), pressures on production capacity (job vacancies), internal demand (housing finance commitments), market confidence (the All Industrials Index), and entrepreneurs' expectations on business prospects and future production.

The expansion and contraction phases identified in a business cycle are periods of rise and fall in economic activity relative to the historical long-term trend. The reference or target series for the XCLI is the chain volume measure of the GDP business cycle used by most decision makers in Australia.

Further Reading

Australian Economic Indicators (1350.0)
The Experimental Composite Leading Indicator is released every quarter and is published in Australian Economic Indicators. It is also released electronically under catalogue number. 1350.0.65.001.

Information Paper: An Experimental Composite Leading Indicator of the Australian Economic Activity (1347.0)
This information paper describes the nature and construction of the experimental composite leading indicator of Australian economic activity.



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